Amended and Restated Employment Agreement between Comtech Telecommunications Corp. and Fred Kornberg

Summary

This agreement, dated June 2, 2003, is between Comtech Telecommunications Corp. and Fred Kornberg, appointing Kornberg as Chairman, President, and CEO. It sets his employment term through July 31, 2008, with automatic two-year extensions unless either party gives notice. Kornberg will receive a base salary, incentive compensation based on company pre-tax income, and benefits. The agreement outlines conditions for termination, including for cause or after a change in control, and specifies compensation and benefits upon termination. Kornberg is not required to relocate and will have significant authority over company operations.

EX-10.(A) 3 d55998_ex-10a.txt AMENDED AND RESTATED EMPLOYMENT AGREEMENT Ex-10(A) AMENDED AND RESTATED EMPLOYMENT AGREEMENT AGREEMENT dated June 2, 2003 between Comtech Telecommunications Corp. (the "Company") and Fred Kornberg ("Kornberg"). Kornberg is presently Chairman of the Board of Directors, President and Chief Executive Officer of the Company and is employed pursuant to an Agreement dated August 20, 1992, as amended (the "Employment Agreement"). The Company and Kornberg desire to extend the term of Kornberg's employment and effect certain other changes. Accordingly, the Company and Kornberg hereby amend and restate the Employment Agreement to read in its entirety as follows: 1. The Company hereby employs Kornberg as general manager and chief executive officer of its business for the period (hereinafter referred to as the "Employment Period") commencing the date hereof and, except as otherwise provided in Paragraph 6 hereof, terminating on July 31, 2008; provided, however, that the Employment Period shall be automatically extended (subject to Paragraph 6) for successive two-year periods unless either party hereto gives notice of non-extension to the other at least six months in advance of the then scheduled termination date. Kornberg shall have supervision over the business and affairs of the Company and its subsidiaries, shall report and be responsible only to the Board of Directors of the Company, and shall have powers and authority superior to those of any other officer or employee of the Company or any of its subsidiaries. Kornberg accepts such employment and agrees to devote his full business time and effort to the business and affairs of the Company and, subject to his election as such, to serve as a director and as Chairman of the Board and President of the Company. He shall not be required to relocate his principal residence or to perform services which would make the continuance of such residence inconvenient to him. 2. The Company shall pay to Kornberg, for all services rendered by him during the Employment Period, compensation as follows: (a) Salary ("Base Salary") at the annual rate of $395,000, commencing the date hereof (to be automatically increased to $475,000 as of August 1, 2003), plus such additional amounts, if any, as the Board of Directors may from time to time determine, payable in accordance with the Company's current practice. Once increased, the Base Salary may not be decreased without Kornberg's prior written consent. (b) Incentive compensation ("Incentive Compensation") for each fiscal year in which any part of the Employment Period falls in an amount (not to exceed Kornberg's Base Salary for such fiscal year) equal to 3.5% of the Company's Pre-Tax Income for each such fiscal year, plus such additional amounts, if any, as the Board of Directors may from time to time determine; provided, however, that if the Employment Period terminates other than at the end of a fiscal year, Incentive Compensation shall be based upon the Company's Pre-Tax Income for the then current fiscal year through 2 the most recent fiscal quarter ended prior to such termination. For purposes of this Paragraph 2(b): (i) The Company's "Pre-Tax Income" for any fiscal year or period shall be the consolidated earnings of the Company and its subsidiaries for such fiscal year or period, as determined by the independent accounting firm employed by the Company as its regular auditors in accordance with generally accepted accounting principles applied on a consistent basis, before (i) any extraordinary item, (ii) provision for federal, state or municipal income taxes thereon, (iii) provision for any Incentive Compensation payable to Kornberg hereunder, (iv) any write-off of in-process research and development acquired, and (v) at the discretion of the Compensation Committee of the Company's Board of Directors, any non-recurring items. (ii) Incentive Compensation payable with respect to any fiscal year shall be paid to Kornberg promptly after completion of the Company's audited year-end financial statements for such fiscal year, or, for purposes of the proviso in Paragraph 2(b), promptly after completion of the relevant unaudited quarterly statements, as the case may be. At the discretion of the Compensation Committee, one-third of the amount of any Incentive Compensation may be paid by the issuance to Kornberg of shares of Common Stock of the Company having an aggregate fair market value as of the day prior to issuance equal to such one-third of the Incentive Compensation. The per share fair market value of the Common Stock as of a date, for purposes of this provision, shall be the average mean of the daily high asked and low bid prices of the Common Stock, if then traded in the over-the-counter market, or the average mean of the daily high and low closing prices of the Common Stock, if then 3 traded on the National Market System of the NASDAQ Stock Market or on a national securities exchange, for the 30 trading days immediately preceding the relevant date. If Kornberg voluntarily terminates his employment with the Company other than as permitted by Paragraph 6(b) of this Agreement, or if the Company terminates his employment for cause as defined in Paragraph 6(a) hereof, Kornberg shall forfeit his right to receive any Incentive Compensation accrued but unpaid in accordance with this Paragraph 2(b)(ii). 3. During the Employment Period, Kornberg shall be entitled to participate in, and receive benefits in accordance with, the Company's employee benefit plans and programs at the time maintained by the Company for its executives, subject to the provisions of such plans and programs, and to be reimbursed for financial planning services not to exceed $35,000 in any fiscal year. 4. During the Employment Period, Kornberg shall be entitled to receive reimbursement for all expenses reasonably incurred by him in connection with his duties hereunder in accordance with the usual procedures of the Company, and he shall be entitled to the incidental use of Company employee time for his personal financial record keeping and related matters. 5. (a) The Company shall obtain (subject to Kornberg's insurability) and keep in full force and effect during the Employment Period, at its own cost and expense, insurance covering Kornberg's life in the amount of $2.5 million (or, if higher, five times Kornberg's then Base Salary) (including any insurance obtained pursuant to Paragraph 3 hereof) plus such additional amounts, if any, as the Board of Directors 4 may from time to time determine, payable to his estate or such other person or persons as he may from time to time direct. (b) In addition to the insurance provided for in Paragraph 5(a) hereof, the Company, in its discretion, and at its own cost and expense, may also obtain insurance covering Kornberg's life in such amount as it considers advisable, payable to the Company, and Kornberg agrees to cooperate fully to enable the Company to obtain such insurance. 6. The Employment Period may be terminated only as follows: (a) By action of the Board of Directors of the Company, upon notice to Kornberg, if during the Employment Period Kornberg shall fail to render the services provided for hereunder for a continuous period of 12 months because of his physical or mental disability, or for cause, which shall mean the commission of acts of willful malfeasance or gross negligence materially and adversely affecting the Company's business. (b) By Kornberg, on thirty days notice to the Company within one year after a Change in Control of the Company, as defined in Paragraph 7(d) hereof, occurs. 7. If Kornberg terminates the Employment Period in accordance with Paragraph 6(b) hereof, the following provisions shall apply: 5 (a) Subject to Paragraph 7(c) hereof, the Company shall pay to Kornberg, within 30 days after the effective date of the termination (the "Effective Date"), a lump sum equal to: (i) the greater of (x) Kornberg's Base Salary, at the rate in effect at the time such notice is given, for the full unexpired term of the Employment Period, or (y) three times Kornberg's Base Salary then in effect; plus: (ii) the amount of any unpaid Incentive Compensation (x) accrued with respect to any fiscal year ended prior to the Effective Date, and/or (y) with respect to the then current fiscal year, pursuant to the proviso in Paragraph 2(b); plus (iii) if and to the extent Kornberg so elects, an amount equal to (x) the number of shares of Common Stock of the Company subject to unexercised options (whether or not then exercisable) held by Kornberg at the Effective Date, multiplied by (y) the difference between the weighted average exercise price of such options and the per share fair market value of the Common Stock at the Effective Date, against surrender to the Company of all options (and any related stock appreciation rights) relating to the Common Stock held by Kornberg at the Effective Date and elected by him to be treated in accordance with this Paragraph. The per share fair market value of the Common Stock as of a date, for purposes of this provision, shall be the average mean of the daily high asked and low bid prices of the Common Stock, if then traded in the over-the-counter market, or the average mean of the daily high and low closing prices of the Common Stock, if then traded on the 6 National Market System of the NASDAQ Stock Market or on a national securities exchange, for the 30 trading days immediately preceding the relevant date. (b) For the full unexpired term of the Employment Period, the Company shall continue Kornberg's participation in each employee benefit plan or reimbursement arrangement (including, without limitation, life insurance and medical plans and including, to the extent allowed, amending such plans) in which Kornberg was entitled to participate immediately prior to the Effective Date as if he continued to be employed by the Company hereunder. If the terms of any benefit plan of the Company may not under Section 401 (a) or other similar provisions of the Internal Revenue Code of 1986, as amended (the "Code"), permit continued participation by Kornberg, the Company will arrange to provide to Kornberg benefits substantially equivalent to, as to time and amount, and no less favorable than, on an after-tax basis, the benefits he would have been entitled to receive under such plan if he had been continuously employed by the Company for the full unexpired term of the Employment Period. Kornberg shall have the option to have assigned to him, at no cost and with no apportionment of prepaid premiums, any assignable insurance policies owned by the Company that relate specifically to Kornberg and are payable to his estate or his designee(s). (c) Notwithstanding any other provision of this Agreement, the amounts payable to Kornberg under Paragraph 7(a) shall be equal to whichever of the following amounts shall result in the greater after-tax payment to Kornberg, after application of all federal, state and local taxes applicable to such payments: 7 (i) the amount otherwise payable under Paragraph 7(a) without regard to this Paragraph 7(c); and (ii) the amount payable in (i) above, reduced by the total amounts payable under Paragraph 7(a) and (b) to the extent included as parachute payments under Section 280G(b)(2) of the Code, but only to the extent such amounts included as parachute payments exceed 299% of Kornberg's "Base Amount," as defined in Section 280G(b)(3)(A) and (d)(1) and (2) of the Code. The calculation of after-tax payments under this Paragraph 7(c) shall be made by independent public accountants selected by Kornberg and consented to by the Company, which consent shall not be unreasonably withheld or delayed. The fees and expenses of such accountants shall be borne by the Company. (d) Except as provided below, for purposes of this Employment Agreement a Change in Control shall be deemed to have occurred: (i) upon any "person" as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Common Stock of the Company), becoming the owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities; 8 (ii) during any period of two (2) consecutive years, individuals who at the beginning of such period constitute the Board of Directors, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in sub-paragraph (i), (iii), or (iv) of this Paragraph or a director whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board of Directors of the Company) whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors; (iii) upon a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person (other than those covered by the exceptions in (i) above) acquires more than 50% of the 9 combined voting power of the Company's then outstanding securities shall not constitute a Change in Control of the Company; or (iv) upon the stockholders of the Company approval of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets other than the sale or disposition of all or substantially all of the assets of the Company to a person or persons who beneficially own, directly or indirectly, at least 50% or more of the combined voting power of the outstanding voting securities of the Company at the time of the sale. 8. (a) In order to induce Kornberg to enter into this Agreement, the Company agrees that if it breaches this Agreement, Kornberg shall have no further obligations hereunder and shall be under no duty to seek other employment or otherwise mitigate his damages, and the Company shall pay Kornberg the following amounts as liquidated damages in lieu of any further obligations hereunder: (i) An amount equal to 85% of his total Base Salary, at the rate in effect at the time of such breach, for the full unexpired term of the Employment Period, such amount to be payable within 10 days after such breach; plus (ii) An amount equal to his Incentive Compensation for the full fiscal year in which the breach occurs; and (iii) If and to the extent Kornberg elects to receive such amount, an amount equal to that which would be payable under Paragraph 7(a)(iii) 10 hereof if Kornberg had terminated this Agreement pursuant to Paragraph 6(b) as of the date of such breach; provided however, that if a Change in Control of the Company has occurred at any time prior to the date of such breach, Kornberg shall be entitled to receive as liquidated damages amounts and benefits equal to the amounts and benefits he would have been entitled to receive pursuant to Paragraph 7 hereof (including Paragraph 7 (c)) if he had terminated the Employment Period effective on the date of breach. (b) The Company shall be responsible for Kornberg's reasonable attorney's fees and disbursements in any action to recover any amounts due him or obtain other relief under this Agreement or in any action relating to a breach by the Company of this Employment Agreement. 9. (a) Kornberg acknowledges that his services hereunder are of a special and unique nature and his position with the Company places him in a position of confidence and trust with clients and employees of the Company. Therefore, and in consideration of the Company's performance of its covenants and agreements under this Agreement, Kornberg will not at any time during his employment with the Company and for a period of two years thereafter (the "Restrictive Period"), directly or indirectly, engage in any business (as an owner, joint venturer, partner, stockholder, director, officer, consultant, agent or otherwise) which competes with the business in which the Company is presently engaged or may be engaged at any time during his employment with the Company. 11 (b) Kornberg agrees that he will not (except on behalf of the Company during his employment with the Company), during the Restrictive Period, employ or retain, solicit the employment or retention of, or knowingly cause or encourage any entity to retain or solicit the employment or retention of, any person who is or was an employee of the Company at any time during the period commencing 12 months prior to the termination of Kornberg's employment with the Company. After termination of Kornberg's employment with the Company: (i) Kornberg will refrain from disparaging, whether orally, in writing or in other media, the Company, its Affiliates, the officers, directors and employees of each of them, and the products and services of each of them, and (ii) the Company will not disparage Kornberg or otherwise comment upon the employment performance of Kornberg other than as may be required by law or as requested by Kornberg. (c) Any discovery, design, invention or improvement (whether or not patentable) that Kornberg develops during his employment with the Company (whether or not during his regular working hours or on the Company's premises) and that is related to the Company's business or operations as then conducted or contemplated, shall belong solely to the Company and shall be promptly disclosed to the Company. During the period of his employment with the Company and thereafter, Kornberg shall, without additional compensation, execute and deliver to the Company any instruments of transfer and take any other action that the Company may reasonably request to carry out the provisions of this Paragraph, including executing and filing, at the Company's expense, patent and/or copyright applications and assignments of such applications to the Company. 12 (d) Kornberg will not at any time, directly or indirectly, without the Company's prior written consent, disclose to any third party or use (except as authorized in the regular course of the Company's business or in the Kornberg's performance of his responsibilities as the Company's Chief Executive Officer) any confidential, proprietary or trade secret information that was either acquired by him during his employment with the Company or thereafter, including, without limitation, sales and marketing information, information relating to existing or prospective customers and markets, business opportunities, and financial, technical and other data (collectively, the "Confidential Information"). After termination of Kornberg's employment with the Company for any reason and upon the written request of the Company, Kornberg shall promptly return to the Company all originals and/or copies of written or recorded material (regardless of the medium) containing or reflecting any Confidential Information and shall promptly confirm in writing to the Company that such action has been taken. Notwithstanding the foregoing, the following shall not constitute Confidential Information: (i) information that is already in the public domain at the time of its disclosure to Kornberg; (ii) information that, after its disclosure to Kornberg, becomes part of the public domain by publication or otherwise other than through Kornberg's act; and (iii) information that Kornberg received from a third party having the right to make such disclosure without restriction on disclosure or use thereof. 10. Kornberg acknowledges that, in view of the nature of the Company's business, the restrictions contained in this Agreement are reasonably necessary to protect the legitimate business interests of the Company and its Affiliates and that any violation of such restrictions will result in irreparable injury to the Company for which 13 money damages will not be an adequate remedy. Accordingly, Kornberg agrees that, in addition to such money damages, he may be restrained and enjoined from any continuing breach of such covenants without any bond or other security being required by any court. If any restriction contained in this Agreement shall be deemed to be invalid, illegal or unenforceable by reason of the extent, duration or geographical scope, or otherwise, then the court making such determination shall have the right to reduce such extent, duration, geographical scope or other provisions hereof, and in its reduced form such restriction shall then be enforceable in the manner contemplated thereby. 11. In consideration of the payments and other undertakings set forth herein, Kornberg acknowledges that upon the termination of his employment with this Company, the execution of a release, in substantially the form attached hereto as Exhibit A, is an express condition to his right to receive severance compensation pursuant to Paragraph 8 hereof in the event such Paragraph is applicable. 12. Any offer, notice, request or other communication hereunder shall be in writing and shall be deemed to have been duly given if hand delivered or mailed by registered or certified mail, return receipt requested, addressed to the respective address of each party hereinafter set forth, or to such other address as each party may designate by a notice pursuant hereto, which change of address notice shall be effective upon receipt thereof: 14 If to the Company: Comtech Telecommunications Corp. 105 Baylis Road Melville, NY 11747 Attention: Secretary If to Kornberg: Mr. Fred Kornberg 17 Palatine Court Syosset, NY 11788 13. If any provision of this Agreement shall be held for any reason to be unenforceable, the remainder of this Agreement shall nevertheless remain in full force and effect. 14. This Agreement, including, without limitation, the provisions of this Paragraph 14, shall be binding upon and inure to the benefit of, and shall be deemed to refer with equal force and effect to, any corporate or other successor to the Company which shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or business of the Company. This Agreement shall not be assignable by the Company or any such successor, except to the corporate or other successor referred to in the preceding sentence. Kornberg may not assign, pledge or encumber his interest in this Agreement without the written consent of the Company. This Agreement shall be binding upon and inure to the benefit of Kornberg, his heirs and personal representatives. 15 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. COMTECH TELECOMMUNICATIONS CORP. By: /s/ Robert G. Rouse ------------------------------------- Authorized Signatory Approval of Chairman of the Compensation Committee of the Board of Directors /s/ George Bugliarello /s/ Fred Kornberg - ---------------------------- ------------------------------- Fred Kornberg 16 Exhibit A General Release For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, I, for myself and my successors, assigns, heirs and representatives (each, a "Releasing Party"), hereby release and forever discharge Comtech Telecommunications Corp. (the "Company"), its stockholders, officers, directors, employees, agents and attorneys, and their respective successors, assigns, heirs and representatives (each, a "Released Party"), individually and collectively, from any and all claims, demands, causes of action, liabilities or obligations, known or unknown, pending or not pending, liquidated or not liquidated, of every kind and nature whatsoever (collectively, the "Released Claims") which the Releasing Party has, has had or may have against any one or more of the Released Parties arising out of, based upon or in any way, directly or indirectly, related to the Company's business, my employment with the Company or the termination of such employment; provided, however, that this General Release shall have no effect whatsoever upon the Company's obligations, if any, to pay severance compensation pursuant to the Amended and Restated Employment Agreement between the undersigned and the Company, dated June 2, 2003 or the rights of the undersigned to enforce such obligations. The Released Claims include, without limitation, (a) all claims arising out of or relating to breach of contract, the Fair Labor Standards Act, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, the National Labor Relations Act, the Americans with Disabilities Act, the Employee Retirement Income Security Act and/or any other federal, state or local statute, law, ordinance, regulation or order as the same may be amended or supplemented from time to time, (b) all claims for back pay, lost benefits, reinstatement, liquidated damages, punitive damages, and damages on account of any alleged personal, physical or emotional injury, and (c) all claims for attorneys' fees and costs. I understand and acknowledge that I am hereby being advised to consult with an attorney prior to signing this General Release. My decision to sign this General Release is my own voluntary decision made with full knowledge that I have been advised to consult with an attorney and I intend to be bound by this General Release in accordance with its terms. Dated: --------- ---------------------------------------- Fred Kornberg 17